Q&A Hero

Real Estate

Q: In income property appraisal, the gross income multiplier is often considered part of the sales comparison approach.
Q: If you subtract vacancy and credit loss from gross scheduled income, you arrive at the effective gross income.
Q: A 5% savings account that has just paid a $500 annual dividend is worth about $25,000.
Q: Small income properties are bought and sold only for their tangible amenities.
Q: A 50-year-old building with a total life expectancy of 100 years should be depreciated at 50%, regardless of its effective age.
Q: The capitalized income method can be used to estimate either the amount of accrued depreciation from all causes, or that from a single cause.
Q: A gross income multiplier is used to estimate loss in value by the cost-to-cure method.
Q: When you base your depreciation estimate on the "effective age" of the building rather than the actual age, you are relying on an estimate of the market's view of the property.
Q: The sales data or market method is the most direct way to estimate loss in value.
Q: Allowable deduction from book value is one of the four basic appraisal methods for measuring accrued depreciation.
Q: A misplaced improvement suffers from functional obsolescence.
Q: Depreciation is usually classified as incurable if it is not economically feasible to correct the condition(s) causing the loss in value.
Q: Economic obsolescence is caused by factors outside the property.
Q: Accrued depreciation can be defined in appraisal terms as the total loss in value from all causes.
Q: Some cost manual services provide on-line computer access.
Q: Increased floor area results in higher costs per square foot.
Q: Indirect cost elements should not be included in cost estimates.
Q: Direct cost elements include labor, materials, and design costs.
Q: The unit-in-place method of estimating costs is most often used as a supplement to refine the square-foot method.
Q: The quantity survey method is the most practical and widely used method of estimating construction costs.
Q: The cost approach is often emphasized when estimating the value of new or nearly new property.
Q: Replacement cost and reproduction cost are the same.
Q: The cost estimates used in appraisals should reflect cost levels on the date of value, instead of actual or historic costs.
Q: Cost estimates are useful only in the cost approach to value.
Q: The greatest weight should generally be given to the comparable sales that require the least adjustment.
Q: A subordination clause in a land sales agreement often involves seller financing.
Q: The price per dwelling unit may be more important in multiple-residential land appraisals than the price per square foot.
Q: An adjacent site purchased by the local grocer for business expansion would be a good market comparable in your appraisal of a parcel one block away with the same size, shape, and zoning.
Q: Prior sales of the subject property should be noted, but are always irrelevant to the value of land.
Q: The land residual method is based on the principle of surplus productivity.
Q: Land value estimates by the abstraction method routinely are just as accurate as those arrived at by the market method.
Q: Whether the land is actually vacant or improved, it should be appraised as if it were vacant.
Q: An opinion of highest and best use is required for all land appraisals made for the purpose of estimating market value.
Q: Land or site value estimates are important only in the appraisal of vacant properties.
Q: A comparable sale should be adjusted for the terms of sale when the sale involves unique financing that offers an advantage to the buyer.
Q: Using "matched pairs" of comparable sales is considered an indirect method of estimating sales adjustments.
Q: Variable units of comparison can often be effectively analyzed by graphing the sales.
Q: If the 1.800 square-foot houses in the subject neighborhood sell typically at $200 per square foot, you would expect that a 1.400 square-foot house would sell for under $200 per square foot.
Q: An example of an economic unit of comparison in the appraisal of land is the price per buildable apartment or dwelling unit.
Q: To adjust the sales price of a comparable sale with a 10% better location, you should add 10% to the price.
Q: Units of comparison are dollar or percentage amounts that are added to, or subtracted from, the comparable sales prices.
Q: Two or more percentage adjustments should theoretically be multiplied together (instead of added) when they are dependent upon each other.
Q: Sales adjustments should be market-related.
Q: The four elements of comparison used in the sales comparison approach include the terms and time of sale, as well as location and physical elements about the property.
Q: A neighborhood sales study finds selling prices of $150,000, $157,500, $159,000, $162,000, and $164,000 for homes similar to the subject property. The median price of this sample is $158,500.
Q: Data resources on the internet provide general data on the economy and regulatory information of use to the appraiser.
Q: Sales data published and/or available on line for the use of subscribing appraisers is often generated by cooperating lenders and appraisers.
Q: Even though listings and offers may be available, they are of no significant use to an appraiser.
Q: A sale between the property owner and a tenant can be assumed to be an open market transaction.
Q: USPAP requires that any listing or sale of the subject property around the date of value be considered in the appraisal.
Q: In the analysis of sales transaction data, the actual date that the sale price was agreed upon is the theoretical date of sale.
Q: The sales comparison approach has no statistical connections.
Q: The first step in the sales comparison approach is to research comparable sales.
Q: The sales comparison approach is based on the principle of substitution.
Q: Colonial styling includes several types of early American architectural styles.
Q: Good architectural design is independent of functional utility.
Q: The building materials selected for a structure depend in part upon their availability, durability, and the climate of the location.
Q: Construction classification refers to the type of occupancy of a structure.
Q: The living area of condominium units for appraisal purposes includes the thickness of all exterior walls and finish.
Q: The effective age of a structure is defined as its relative age considering its condition and marketability.
Q: Quality of construction is rated on an absolute scale.
Q: The marketability and appeal of a house should be rated by the demands and tastes of potential buyers.
Q: The building inspection should be geared to the client's intended use of the report and the appraisal purpose.
Q: The URAR form can be a good checklist for the building inspection.
Q: Deed restrictions are examples of public restrictions on the use of land.
Q: Sidewalks and curbs are considered to be off-site improvements.
Q: Plottage value is always created when adjacent parcels are combined into one ownership.
Q: A key lot is one that is the most important one on the block.
Q: The gross area of a site is just as important as the useful area.
Q: As in a condominium, the site in a planned unit development is a defined block of airspace, plus an undivided interest in the land.
Q: Appraisal standards require the appraiser to consider and analyze the sales history of the subject property.
Q: A non-conforming use could represent a legal problem to be noted in an appraisal.
Q: The highest and best use must always be one that is legal under the present zoning laws, even if a zoning change is anticipated.
Q: The most important reason for inspecting and analyzing the site is to gather information for estimating its highest and best use.
Q: The principle of highest and best use suggests that land must always be valued in its present use.
Q: The agents of production are responsible for both tangible and intangible benefits of real estate.
Q: High valued properties are not generally affected by the proximity of lower valued ones.
Q: The principle of substitution is basic to all three approaches to value.
Q: Disposable income is the amount of family income available after paying rent or other housing costs.
Q: Environmental protection and subdivision reform laws affect the availability and cost of vacant land.
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